Monday August 19, 2013 - 03:36:12 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 19-Aug-2013 -0333 GMT
Equities are down globally. The Dow (15081.47, -0.20%) has fallen sharply last week and is now testing a crucial long-term Support at current level on the Weekly. Lets see if this support helps the Dow to bounce back towards 15500. The market is looking forward towards the FOMC Minutes this week to see potential of market tapering as expected now.
Asia-Pac is down overall. Nikkei (13622.43, -0.20%) is down, testing the crucial support at 13600. The Yen remains weak with increase in oil and gasoline prices. This could help the Nikkei bounce. Shanghai (2060.97, -0.36%) is also down lead by decline in the metal industry and low trade volume. Crucial long-term Support seen near 2035-30.
Nifty (5507.85) fell sharply on Friday. Even blue chips suffered as Rupee hit record low. The Nifty is standing at the edge of a cliff. There is a danger of a fall towards 5250 unless there is a sharp rebound today.
Commodities are mixed overall.
Gold (1381) has risen well but may retreat towards 1350 as charts show Resistance at current levels. Remember it has risen 17.8% since end-June. So, we can see some decent profit-taking. Silver (23.5450) is showing a stronger rise, targeting 24-24.25, as it makes up lost ground against Gold.
Copper (3.3610) continues to rise well in an upward channel and may go upto 3.40-3.45 in the coming weeks.
Nymex WTI (107.44) has dipped at bit after rising to the highest price in two weeks. Brent (110.50) has come down from the resistance level at 111. If this proves strong enough we may see Brent coming down to 108.
Major currencies are at important long-term crossroads now.
The Euro (1.3335) manages to remain above 1.33 although it has come off from Friday's high near 1.3380. Indecisive between 1.34 and 1.33 now. The Pound (1.5630) too is at a crossroads. It has chances of strong rise in coming months if it manages to break above 1.5650. Important Resistance at 1.5750 above that. Failure to rise past 1.5750 can push it down to 1.54 and lower again.
Dollar-Yen (97.44) medium term Resistance at 98.35 and Support at 95.67. The Aussie (0.9216) is trading strong with strong Support at 0.9155. Targets 0.9300.
The Brazilian Real (2.3885) continues to weaken sharply and the South African Rand (10.08) is also likely to weaken further. The Rouble could be stabilising a bit. The Rupee (61.66) is in danger of weakening some more to 62.35 before it may strengthen.
The US 10-yr (2.85%) continues to rise and may well see 3.05% well before next month's FOMC meetings as the market fully discounts QE tapering. Wednesday's July FOMC Minutes release will be watched keenly. German (10-Yr Bunds 1.88%) and UK yields (UK 10-Yr Gilts 1.73%) are also rising alongwith US yields and so the US Dollar is not being able to get any yield advantage against the Euro (1.3333) and Pound (1.5630).
But Japanese yields have been dipping (10-Yr JGB 0.76%) and the US-Japan 10-Yr Spread (2.12%) has increased further. This is helping keep the Dollar-Yen (97.44) bid despite the fall in the Nikkei.
The Indo-US 10-Yr Spread (6.10%) may come off if US Yields continue to rise. There may be limited room for further increase in Indian 10-Yr from the current level of 8.93%. We may have to allow for 9.15% though. Expect stabilisation after that.
No major data release today.
EU EA (17) Curr Acct Bal
...Actual 16.90 EUR Bln ...Previous 19.60 EUR Bln
EU Trade Bal
...Actual 14.90 EUR Bln ...Previous 13.80 EUR Bln
EU CPI (YoY)
...Actual 1.67 % ...Previous 1.60 %
US Housing Starts (Mln)
...Actual 896 K ...Previous 846 K
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